A middle-aged woman, who taught English and translated documents for an Iranian dissident group dedicated to democracy, hardly fits the image of a terrorist, but that individual happens to be the sole defendant in a single-count federal indictment in Brooklyn charging her with providing material “personnel” support to terrorists.  Ms. Taleb-Jedi’s problem is that the organization for which she worked, the People’s Mojahedin Organization of Iran (“PMOI”) is also committed to the violent overthrow of the Iranian government, and as such, is on the U.S. government’s list of foreign terrorist organizations (“FTO”).  The fact that now – more than ten years after that designation – the PMOI has become the current darling of the U.S. military, the U.K. no longer designates it a terrorist organization finding that its means and methods have changed, and the U.S. military as well as several members of Congress similarly think the terrorist designation should be reversed, is immaterial. 

In United States v. Taleb-Jedi, 06 Cr 652 (BMC), 2008 WL 2832183 (E.D.N.Y. July 23, 2008), the court denied her lawyers’ multi-layered and creative motion to dismiss the indictment, but in the process warned the prosecutors that “if the proof at trial shows only that defendant participated in the PMOI through mere membership and chanting at meetings, it may well be insufficient to reach a jury or sustain a guilty verdict.”  Similarly, “if the defendant taught English for the sole purpose of helping other members to advocate before the United Nations on behalf of the PMOI, the statute may not reach such conduct.” 

The case is a splendid example of no-stone-unturned criminal defense.  Ms. Taleb-Jedi’s lawyers argued variously that the indictment should be dismissed for failure to state a claim under Fed.R.Crim.P. 7(c) (because it fails to detail the material support provided), that the statute is unconstitutional under the First and Fifth Amendments (because it precludes the defendant from challenging at trial the FTO designation), that the statute’s specific intent element is deficient (it is not enough that the defendant intend to further the PMOI’s goals, she must also specifically intend to further its terrorist aims), that the statute is impermissibly vague (because it doesn’t adequately define “personnel”), that the statute is overbroad (because it criminalizes protected First Amendment activity) and that the prosecution is outrageous (e.g., because the U.S. military may now use the PMOI to gather intelligence).

In a lengthy and meticulous decision, the court rejected these challenges, highlighting the difference between someone who is merely an advocate, and one who is an actual employee, “under the terrorist organization’s direction or control.”  The court also noted that in wartime, it is permissible for the military to pick and choose its friends, and the DOJ its enemies, war being an “outrageous but . . . sometimes necessary undertaking.”

The case is, however, a disturbing reminder – in the same week that Osama Bin Laden’s driver gets acquitted of the most serious charge against him and sentenced to close to time-served by a military jury – that in the war on terror, just like the war on drugs, the Department of Justice devotes its preciously limited resources on easy and innocuous targets.

A trip to the United Kingdom to take depositions might be a welcome diversion for many lawyers, but not during the weeks leading up to a major, document-intensive, white collar criminal trial.  In United States v. Vilar, 05 CR 0621 (RJS), 2008 WL 2944654 (S.D.N.Y. July 31, 2008), previously blogged about here and here, the trial had been scheduled to begin on September 8, 2008.  On July 21, 2008, almost three years to the day after the indictment had been returned, the government moved to take the depositions of four witnesses in the U.K., claiming it had only just learned the witnesses were unwilling to testify at a U.S. trial.  The defendants opposed, pointing out that the government had inexplicably dragged its feet on this matter for too long, and conducting foreign depositions at this stage would unfairly prejudice their ability to prepare for trial.  Granting the motion as to two of the proposed witnesses as well as a two-week adjournment (in part to ensure the depositions could be completed without disrupting trial preparation), the court’s decision is an interesting spotlight on this rarely-used mechanism in criminal cases.

Requirements for Rule 15 Depositions

The court held that, as to two witnesses, all the requirements for depositions under Fed.R.Crim.P. 15 were met here: (1) they were unavailable (they were outside the subpoena power of the court, and refusing to testify, despite the government’s promise of an all expenses paid trip), (2) their testimony was material (it was “highly relevant” to one of the defendant’s alleged knowledge of and participation in the fraudulent schemes at issue, and to both defendants’ alleged misrepresentations), and (3) their testimony was necessary “to prevent a failure of justice” (a requirement usually satisfied when the first two are met, and here, the government’s delay did not represent such “as serious lack of due diligence” as to justify denying the motion). 

Showing Necessary to Succeed on Rule 15 Motion

Notably, in reaching its decision, the court rejected the defendants’ demand that in order to evaluate the availability prong, the government be directed to provide affidavits from the witnesses themselves confirming that they would not travel to the U.S, and in particular, that the government confirm that it had advised one of the witnesses that he himself may be a target in the case, which may impact his willingness to participate in any deposition.  In addition, the court rejected a similar demand that in order to satisfy the materiality prong, the government must produce affidavits from the witnesses as to their proposed testimony, or at a minimum, produce all of the notes and memoranda of the witness interviews.

Timing of Rule 15 Motion

Also noteworthy is the court’s rejection of the defendants’ argument that in considering whether the government had engaged in “unexcused delay,” the court should take into account the government’s failure to seek these depositions during the three-year period following the indictment.  “[T]hese prior periods of delay are simply unrelated to the issue of whether conducting the proposed depositions at this time would unfairly prejudice defendants . . . More importantly, defendants have failed to cite any order that the government violated by failing to bring a Rule 15 motion at an earlier date or any authority indicating that the government’s failure to file a Rule 15 motion prior to the two previously scheduled trial dates constituted a waiver of its ability to file such a motion at this time.”

Comment

This case is an interesting counterpoint to United States v. Mason, discussed here, where the court precluded evidence due to a late Rule 16 disclosure rather than adjourn a firm trial date in a multi-defendant case.  Of course, Rule 16 disclosures, unlike Rule 15 notices, have timing constraints: they are to be made upon request, and newly obtained Rule 16 materials are to be “promptly” disclosed before trial.  Moreover, in Vilar, unlike Mason, the only prejudice the defense could identify was disruption of trial preparation.  There was no suggestion that the depositions themselves might open a hornet’s nest requiring additional investigation or a severance.  Finally, the defendants’ laches claim might have had more traction if Mr. Vilar wasn’t simultaneously seeking his own adjournment of the trial until November. 

“Queen for a day” (proffer) agreements – bare your soul to prosecutors in exchange for some limited protections – usually benefit the government more than the defendant.  For one thing, in these agreements, the defendant gives up any additional protections he may be entitled to under Fed.R.Evid. 410, which precludes admission at trial of ”statements made in the course of plea discussions with a [prosecutor].”
 
Not that defendants get much choice about whether to sign the agreement.  Most prosecutors will not agree to listen to a proffer without one.  But what if a proffer does in fact proceed without any proffer agreement: does the defendant automatically get the benefit of Rule 410?  Or should the defense lawyer do something more to invoke the rule’s protections?  That is the interesting question presented but not answered in United States v. Galestro, 06-CR-285 (ARR), 2008 WL 2783360 (E.D.N.Y. July 15, 2008), where the defendant, in his lawyer’s presence, spoke without a proffer agreement to prosecutors several days prior to the unveiling of an indictment charging him with death-eligible murder. 

The Scope of Fed.R.Evid 410

The Second Circuit has held that statements made by a defendant to prosecutors are not “plea discussions” under Rule 410, unless the defendant, “in some way, express[es] the hope that a concession to reduce the punishment will come to pass.”  United States v. Levy, 578 F.2d 896, 901 (2d Cir.1978).  The Levy Court expressly left open the question of whether statements made in a less formal “de facto process of plea bargaining” can be “plea discussions” for purposes of Rule 410 protections. 

In Galestro, the defense proposed that Levy’s void be filled with a two-tier analysis that focuses on whether at the time of the discussion, the defendant showed a subjective expectation to negotiate a plea, and whether that expectation was reasonable under the circumstances.  The government, argued alternatively, that there are no “plea discussions” if the meeting was at the defendant’s behest, he “sought to avoid indictment altogether rather than to plead,” and no plea deal was offered or ever made. 

Invoking Rule 410 Protection

In the end, the Galestro court did not have to decide the issue, because here, it was undisputed that Galestro’s attorney announced at the beginning of the proffer meeting that he considered it to be “in furtherance of settlement negotiations, pursuant to Fed.R.Evid. 410 and Fed.R.Crim.P. 11,” and the prosecutors present said nothing in response.  As the court concluded: “permitting the government to frustrate a defendant’s reasonable, explicit understanding of the nature of a discussion by simply remaining silent would not only be inconsistent with the rationale in Levy, but would undermine the very rationale of Rule 410 – to ‘promote plea negotiations by permitting defendants to talk with prosecutors without sacrificing their ability to defend themselves if no disposition agreement is reached’” (citation omitted).

Comment

Here, Galestro's lawyer's prescient statement at the beginning of the proffer meeting saved the day.  Without it, the government might have prevailed on the argument that this wasn’t a plea negotiation at all - it was a (misleading) innocence proffer, in which the defendant wasn't seeking to reduce his punishment, he was seeking to eliminate it.  Which begs another interesting question: whether innocence proffers are exempt from Rule 410 protection, since their goal is not a plea bargain but a dismissal. 

Innocence proffers, however, as the Second Circuit has pointed out elsewhere, are often preludes to plea negotiations.  In other words, they are part of the de facto process of plea bargaining, which runs the gamut of mindsets from denial to acceptance.  It makes no sense, and surely undermines the rationale of Rule 410, to carve out of the plea bargaining process (also known as the coming-to-terms process)  any discussions where the defendant professes innocence.  Moreover, the government, with its oft-described “awesome advantages in bargaining power,” knows full well how to obtain a waiver of Rule 410 protections prior to an innocence proffer, and it should not be rewarded for its failure to do so.

As noted by this blog previously, see here, the Adam Walsh Act of 2006 prohibits the reproduction of child pornography during legal proceedings, and in particular, permits the government to refuse to supply copies of child pornography to the defense in a child pornography prosecution as long as the material is made “reasonably available” to the defendant.  The “reasonably available” concept (the so-called “safety valve” of the Act) is defined in the statute as “ample opportunity for inspection . . . at a Government facility.”  The Second Circuit has not yet defined what constitutes “ample opportunity,” but several district courts have required it to be “due-process-level” access to the original material, or the defense team gets a copy of the hard-drive in question.

In United States v. Patt, 06-cr-6016, 2008 WL 2915433 (W.D.N.Y. July 24, 2008), the court further refined the meaning of “ample opportunity,” concluding that there was no due process violation where the defense expert may have found it time-consuming and inefficient to do his job at the government facility, but was nonetheless able to “conduct a complete and independent analysis of the hard-drives” at issue.  In the absence of any claim that the results were “incomplete or compromised . . Patt was provided ample opportunity to inspect and analyze the computer drives that were seized and are alleged to contain child pornography.” 

Securities fraud under § 10(b) of the Securities Exchange Act of 1934 may be “a catchall provision,” the Second Circuit observes in United States v. Finnerty, 2008 WL 2778830 (2d Cir. July 18, 2008), “but what it catches must be fraud” (quoting the Supreme Court in Chiarella v. United States, 445 U.S. 222, 232 (1980)).  In an important decision that puts up a significant roadblock to the criminalization of Wall Street practices (and remarkably cites more civil than criminal precedents), the Court holds in Finnerty that profiting on superior information and other instances of “financial unfairness” – even if they involve violations of New York Stock Exchange rules – do not necessarily constitute securities fraud. 

Facts

Finnerty, a specialist at the NYSE, was charged with securities fraud, arising out of the practice of “interpositioning” – whereby he prevented the normal agency trade between matching public orders, and instead interposed himself between the matching orders in order to generate profits for his firm’s account.  In other words, he “act[ed] as an arbitrager by taking a profit on the spread between the bid price and the ask price of customers’ orders.”  A securities fraud charge may be based on manipulative or deceptive conduct.  Here, since the government conceded that Finnerty’s conduct was not manipulative, the sole question on appeal was whether the government sufficiently proved that it was deceptive.

Deception Requires Creating A False Impression

Pointing out that “ ‘deception’ ... irreducibly entails some act that gives the victim a false impression,” the Court held that the government had “identified no way in which Finnerty communicated anything to his customers, let alone anything false.”  Perhaps shooting itself in the foot, the government had compared Finnerty in summation to a bank teller who occasionally pockets one of the hundreds of withdrawals he makes everyday.  Like that thieving bank-teller, the Court agreed, Finnerty had, at most, engaged in “garden variety conversion.”  But, in the absence of “proof that Finnerty conveyed a misleading impression to customers,” there were no grounds to impose securities fraud liability here, especially when to do so may simply “invite litigation beyond the immediate sphere of securities litigation and in areas already governed by functioning and effective state-law guarantees” (citation omitted). 

Violation of NYSE Rule Not Enough

At most, the government proved that Finnerty violated a NYSE rule, but “violation of an NYSE rule does not establish securities fraud in the civil context, let alone in a criminal prosecution.” This is true even if Finnerty knew he violated the rule and tried to cover it up.  While some customers may have assumed that he complied with NYSE rules, “unless their understanding was based on a statement or conduct by Finnerty, he did not commit a primary violation of § 10(b) – the only offense with which he was charged.” 

Being in the wrong place at the wrong time with the wrong people may sadly be enough for a jury to convict, but “suspicious circumstances . . . are not enough to sustain a conviction for conspiracy,” the Second Circuit reiterated today, in a rare reversal of drug conspiracy convictions on insufficiency grounds.  In United States v. Lorenzo, 07-1435-cr (2d Cir. July 18, 2008), authored by SDNY Judge Barbara Jones sitting by designation, the Court remanded for the entry of judgments of acquittal as to a husband and wife, arrested following a controlled delivery of narcotics seized from a courier at the airport.  (Disclaimer: I represented the husband at trial and, with Robert Culp, on appeal.)

Facts

In a nutshell, the sparse evidence against the two defendants consisted of the following:  a courier, Francesca Leerdam, was arrested at the airport following the discovery of over three kilos of cocaine during a routine inspection of her luggage.  Agreeing to participate in a controlled delivery, she made several monitored calls to her recruiter, Amauri, in the Dominican Republic, who after some indecision, directed her to call his uncle-in-law in Queens, “Julio.”  Julio’s wife Andrea answered the call, told her Julio was sleeping, and directed Leerdam to their residence.  Upon arrival, Andrea, clad in nightgown, greeted Leerdam and proceeded to carry one of her two suitcases into the house, telling her that she would call another taxi to take Leerdam to a nearby hotel.  At this point, agents arrested Andrea, and later arrested the sleeping Julio.  In post-arrest statements, Leerdam  recounted an earlier trip when she had also brought a suitcase to the U.S. for Amauri.  Passing through Customs without incident on this occasion, she called Amauri, who directed her to a location in Queens where she met “Ronnie.”  Ronnie took her to Pennsylvania where he exchanged her suitcase for another.  She was then driven back to New York, where Ronnie introduced her to both Lorenzos, who in turn, drove her to a hotel.  The next morning, Julio Lorenzo arrived alone at Leerdam’s hotel room with a brown bag filled with $14,000, which he proceeded to conceal in Leerdam’s clothing in her suitcase.  He told her it was for Amauri.  He then took her to JFK and saw her safely off on her return flight.  Throughout Leerdam’s entire encounters with the Lorenzos, there was no mention of drugs.

Holding

As to Julio, the Court found a critical element missing to sustain his convictions: “any indication from which a jury could reasonably infer that Julio knew the nature and specific object of the conspiracy.”  Although there was undoubtedly a drug conspiracy, and “Julio was present at and participated in events that furthered the conspiracy,” there was “insufficient evidence to show that he did so knowingly and with the specific intent to further a cocaine smuggling and distribution conspiracy.”  Moreover, the most incriminating evidence against him – his transfer of $14,000 to the courier during her first trip to the U.S. – while “suspicious” and “indicative of participation in illegal behavior . . . is consistent with participation in a wide variety of offenses, and in light of the other evidence, is insufficient to prove Julio’s intent to participate in the conspiracy charged in the indictment.”

The evidence as to Andrea was even less compelling in the Court’s eyes.  Again, that evidence supported “at most an inference that Andrea knew she was assisting in suspicious behavior,” which was also “consistent with providing hospitality to her nephew’s girlfriend and regretting providing such assistance.” 

Comment

Along with United States v. Wexler, 2008 WL 878582 (2d. Cir. April 3, 2008), discussed here, this is an important case on the sufficiency of the evidence necessary in conspiracy cases regarding the defendant’s knowledge of the “nature and specific object” of the conspiracy. 

Striking another blow against the strategic use of peremptory challenges, the Second Circuit upheld the "blind strike" method of jury selection in United States v. Bermudez, 06-5119-cr, 2008 WL 2415713 (2d Cir. June 17, 2008).  This is where both parties simultaneously exercise their peremptory challenges rather than alternately, leading to the possibility that the defense and the prosecutor strike the same person. 

Citing a Nineteenth Century Supreme Court case and five sister circuits, the Court held the defendant has no right to know the government's strikes before announcing his own.  He only has the right to strike up to ten jurors he finds objectionable.  "No injury [is] done if the government unite[s] with him in excluding particular persons from the jury" (quoting Pointer v. United States, 151 U.S. 396 (1894)). 

Of course, for the defense, duplicating a strike with the government means wasting a strike - a strike that could have been used more effectively to increase the defendant's prospects of getting a jury of his peers, or even a couple of jurors of his peers.  Afterall, given the racial disparities between the jury panels and the population of defendants, the defense doesn't just exercise its strikes to exclude people from the jury, it also uses strikes strategically in order to include particular people. Once again, as it did in Rodriguez, the Second Circuit has declined to give the defense any strategic advantage in jury selection, beyond the advantage granted by law (ten strikes as opposed to the government's six). 

In addition to the jury selection issue, most of this opinion deals with an evidentiary issue - whether the government could introduce bolstering evidence in anticipation of, but prior to, an actual attack on their witness's credibility.  The majority affirmed, but there is a compelling (and disheartening) dissent from District Judge Underhill, sitting by designation.